SMM Evening Comments (Dec 10): Shanghai nonferrous metals closed mostly higher, lead fell 0.89%

SHANGHAI, Dec 10 (SMM) – SHFE nonferrous metals rose for the most part on Thursday December 10 as investors kept an eye on Brexit trade talks as well as ongoing negotiations in the U.S. for a coronavirus relief package.

Aluminium, the best performer, rose 2.16%, zinc advanced 0.4%, nickel went up 1.74%, copper climbed 0.61% and tin gained 1.12%, while lead dropped 0.89%.

An SMM survey showed that the average operating rate of BFs at steel mills in China fell 0.4 percentage point from the prior week and decreased 1.11% from the previous year to 87.7% as of December 10.

The ferrous complex rose across the board. Iron ore surged 6.76%, rebar rose 2.38%, and hot-rolled coil climbed 2.91%.

Copper: The most-traded SHFE 2101 copper contract finished the day 0.61% higher at 57,450 yuan/mt. Open interest fell 5,716 lots to 108,000 lots.

UK Industrial production index for October stood at 1.3, which was significantly higher than the predicted value of 0.3, and also increased significantly year on year. It boosted copper prices to a certain extent. US COVID-19 pandemic continues to affect the economy and the stimulus bill is still in the fermentation stage with the wait-and-see attitude of capital market participants. Crude oil also continued to rise today, which obviously supported copper prices.

The trend of LME copper, US Initial Jobless Claims and whether the contract could remain above five-day moving average will come under scrutiny tonight.

Aluminium: The most-liquid SHFE 2101 aluminium contract finished the day 2.16% higher at 16,335 yuan/mt. Open interest rose 1,403 lots to 133,982 lots. Social inventories of primary aluminium across eight consumption areas in China, including SHFE warrants, declined 4,000 mt from the prior week to 596,000 mt as of December 10. SMM data showed that stocks of 6063 aluminium billet across the five major consumption areas – Foshan, Wuxi, Huzhou, Changzhou and Nanchang – in China shrank 2,400 mt from the prior week to 70,300 mt as of December 10.

Zinc: The most-active SHFE 2101 zinc contract closed up 0.4% at 21,440 yuan/mt. Open interest fell 6,194 lots to 88,890 lots.

Nickel: The most-traded SHFE 2102 nickel contract ended the day 1.74% higher at 123,580 yuan/mt today. Open interest rose 11,712 lots to 157,469 lots.

Lead: The most-traded SHFE 2101 lead contract fell to an intraday low of 14,850 yuan/mt and ended the day 0.89% lower at 14,990 yuan/mt. Open interest rose 2 lots to 31,230 lots. Downstream is cautious about restocking amid tepid trading, and secondary lead still maintains a deep discount. The contract is likely to test support from five-day moving average tonight.

Tin: The most-liquid SHFE 2102 tin contract climbed to a session high of 151,920 yuan/mt and finished the day 1.12% higher at 151,330 yuan/mt today. Open interest rose 3,010 lots to 33,680 lots. The contract is expected to trade robustly in the near term. Pressure above is expected to around 153,000 yuan/mt.